Loan rates increase again

Finance website Moneyfacts.co.uk has found that 14 lenders increased their loan rates in the last month.

Two lenders, the AA and Tesco Personal Finance, increased their rates twice.

Abbey has increased rates by five per cent to 12.9 per cent on loans under £4,950.

Moneyfacts.co.uk noted that for a loan of £5,000, specific rates mean borrowers would save £324 by borrowing a further £50.

Other lenders to have raised rates include Alliance & Leicester, Bank of Scotland, Barclaycard and Barclays.

But Moneyback Bank has reduced rates by 0.20 per cent.

Moneyfacts.co.uk said many families were considering consolidating existing debts into one loan to reduce monthly outgoings.

But it added that borrowers may not find the reduction as large as they expected.

The findings came as money education charity Credit Action said the government's updates of the Consumer Credit Act over the last few years have brought British law more up to date in the face of increased lending.

Spokesperson Chris Tapp said the government "went a long way" in updating the country's legal framework.

source: moneynews.co.uk

Credit Action: Lenders will repossess rather than imprison

British lenders will seize property or force people to sell their homes rather than forcing imprisonment in the case of unpaid debt, Credit Action has stated.

The money education charity said lenders of mortgages and secured debt would try to "recoup their money" through action on property rather than attempting to have people imprisoned.

Spokesperson Chris Tapp said people "could end up homeless" or, in the case of unsecured debt, could face county court judgements and bailiffs.

He said action depends on the nature of the debt, noting that with the exception of water, which cannot be denied, people may have their utilities switched off if they cannot pay.

Total personal debt in the UK was £1,443 billion at the end of May.

Secured lending on homes at the end of May totalled £1,210 billion, having increased 8.2 per cent in the last 12 months.

Consumer credit has increased seven per cent in the last 12 month to £233 billion in May.

Source: moneynews.co.uk

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